I’m excited to be announcing that we’re kicking off a project to put together common angel investment documents for Canada. I first wrote about early-stage term sheets back in June of 2015 when we shared the Full Stack common equity term sheet.
Today, NACO is looking to develop standard document templates that will be broadly applicable to its members as a starting point for negotiating investment terms with startups. The resulting templates should act as a reliable guideline for both investors and founders and cover 80% of the content (terms) required to negotiate investments in 80% of member early-stage investment scenarios.
- The goals of the project is to develop standard documents that:
- Align the interests of the founder and funder;
- Position the company for future investment and growth;
- Protect the rights of the investor;
- Reduce the friction inherent in negotiating deal terms
That’s a long way of saying let’s keep deals simple, correct, and get them done quickly!
We’re going to work on basic term sheets for common equity, preferred equity, and convertible debt.
The other elephant in the room are the Y-Combinator SAFE or 500 Startups KISS convertible equity deals. There are various “Canadianized” versions of these floating around, so we’re going to see if we can make an “official” version that everyone can largely agree on.
We’ve got some stretch goals around other related company documents — shareholder agreements, reverse vesting agreements, and so on.
Many law firms have templates for these type of documents. But, they’re passed around in Word docs and squirrelled away in founders’ inboxes. With this Common Docs project, we want to bring it all out in the open.
We’ll work with lawyers, founders, investors and other experienced members of the startup ecosystem to put together a resource for all of Canada.
Our first event is a kick off in Vancouver, and we’ll be doing something in person in late January in Toronto, alongside StartupFest’s ResolveTO event.